When an organization attempts to forecast the supply of and demand for human resources

Strategic HRM: (what is it and the two types)

management of HR philosophies, policies, and practices to enable the achievement of the organizational strategy.

General activities: payroll, accounting, bookkeeping - necessary and routine

Decision sciences: concerned with the effective utilization of human capital, much like finance.

Theories of Strategic Management of Human Resources : HRM making strategic contributions:

previously HR has been associated and measured by the number of disputes resolved, applicants recruited, total hours spent on training etc. HR systems significantly predicted various organizational performance indicators, ranging from reduced employee turnover to improved quality and organizational performance. This perspective stimulated a broad implementation of high-performance HR systems in many businesses, as managers began to believe that investment in HR would eventually lead to higher financial performance.

Resources can be more than just financial, such as company culture and employee low turnover. A firm's human resources can create sustained competitive advantage if they meet all four criteria suggested by the resource-based view : valuable, hard to replicate, rare, and hard to substitute

2) The contingency perspective: The human capital theory and behavioral theories are about:

Although high-performance HR practices in general contribute to high performance, they may be more cost effective for businesses that pursue a differentiation strategy than for those implementing a low-cost strategy. for example, hilton staff are different than best western staff.

Human Capital = labor: collective sum of the attributes, experience, knowledge, and commitment that employees choose to invest in their work. intangible asset comprises the knowledge, education, vocational qualifications, professional certifications, work-related experience, and competence of an organization's employees. intangible asset comprises the knowledge, education, vocational qualifications, professional certifications, work-related experience, and competence of an organization's employees.

different strategies require not only different human capital, but also different behaviours of employees. accurately identify the behaviours needed to implement a strategy, (example: what behaviors are needed for innovation? Competition? Risk taking?) Tactfully challenge and refocus baseless ideas of human behaviour. In general, researchers consider performance appraisal, pay for performance, incentive plans, advancement opportunities, and benefits to enhance employee motivation to behave.

Importance of Strategic HR Planning:

1) Employees help organizations achieve success becaue they are strategic resources

2) planning process itself results in improved goal attainment (HR planners look toward what skills will enable organization to implement its strategy years from now, and with clear strategies come with direction and meaning to staff through mission and vision. Increases motivation and performance, lowers absenteeism, heightened stability and satisfaction).

HR Planning Focuses on two strategies under Porter's model

1) Low cost provider strategy

2) Differentiation strategy

Strategy 1: The Low-Cost-Provider Strategy:

A firm competing on cost leadership attempts to be the low-cost provider of a product or service within a marketplace. Buyers are price sensitive, and businesses appeal to this price consciousness by providing products or services at prices lower than those of competitors. Goal is to price low.

The implications of low-cost provider strategy for six key components of HR are discussed:

Employee: To keep wages low, jobs have to be of limited scope so that the company can hire people with minimal skills at low wages.

HR Planning: At the entry level, succession planning is minimal, ensuring only the feeder line to the next level.

Selection: Recruitment is primarily at the entry, or lowest, level and is from the surrounding external labour market.

Compensation: low wages and fringe benefits

Training: minimal, few skills, fast, inexpensive.

Performance evaluation: Short-term results, with explicit and standardized criteria, are used to evaluate an employee's performance.

Labour Relations: prevent the formation of a union because they believe that unions drive up wages.

Strategy 2: Differentiation Strategy:

buyer preferences are too diverse to be satisfied by one undifferentiated product (Unique and valuable, expensive, niche, loyalty among customers

-key in this strategy is to provide the differentiation that is perceived to be of value to customers while keeping costs down

- innovation and creativity

-employees creative behaviour, a long term focus, interdependent activity, and some risk taking, ability to work in an unpredictable environment. Skills should be broad

-HR Planning: a company that has a differentiation strategy and that recognizes people are the key to competitive advantage. succession managment important.

-Selection: high skills, self motivated, no supervisor needed, flexible attitudes,

-Compensation: potentially low wages, but increased performance pay opportunites, salaries, bonus, stock options.

-Training: lots, also way to generate new ideas

-Performance evaluation: appraisals are based on long term implications not short term. teamwork valued, empowerment.

-Labour relations: unions can be present, shared decision making, shared responsibilities

HR Ensures to be close with all large divisions to ensure one goal is identified and worked toward

Characteristics of an effective HRM Strategy:

External Fit: : HR programs must align with or fit the overall strategy of the organization. HR strategies match organizational strategies

Internal Fit: fit with other functional areas and fit among HR programs.

monitoring of the major factors influencing the organization to identify trends that might affect the formulation and implementation of both organizational and HR strategies.

Four stages of environmental scanning

Scanning: An attempt to identify early signals of changes

Monitoring: A systematic approach to following some key indicators that may affect the organization, such as legislative changes.

Forecasting: After monitoring a trend, an attempt to project the possible impact on the organization. Can be done by delphi technique, impact analysis, or scenario planning (chapt 5)

Assessing: An attempt to describe the impact of the monitored trend on the organization

publications, professional associations (CPHR), Conferences, professional consultants.

Competitive intelligence ( method of forcasting)

formal approach to obtain information about your competitors. Study website, ask questions from staff, hire competitor staff.

How to know if something is important info in environmental scanning and what isnt

Are there ripple effects (ch ange in one aspect impacts anoth er, such as social networking sites affecting both friendships an d professional relationships)?

How profound are the impacts on people's priorities, roles, and expectations?

How large is the impact scope (number of people impacted)?

Will the changes endure over time?

1) economic climate

2) globalization

3) political and legislative factors

4) technological factors

5) demographic factors

6) stakeholders

How easy is it to find people to work for you

How much will is cost in fuel for employees to commute to work

Canadian dollar and your ability to sell internationally

public debt because it affects business taxes,

growth in flows of trade and financial capital across borders. Globalization affects sovereignty, prosperity, jobs, wages, and social legislation.

3) Political and Legislative Factors

: Governments, municipal, provincial, and federal, can influence the business environment through political programs that result in changes to laws and regulation

tax cuts, provide tax incentives to develop jobs, increase job-training opportunities, and create balanced labour legislation.

introduction of new laws.

4)

Technological Factors:

Technology is the process by which inputs from an organization's environment are transformed into outputs. Tools, machines, equipment, software, robots. HR must keep up to date on tech to save money, increase safety, eliminate lower level roles, telecommuting options increase, monitor employee work.

study of population statistics, number of working women, the greying of the workforce, and the number of generations working together all influence HR practices.

Monitor labour market, levels in diversity, general differences (generational changes), and social and cultural differences.

organizations also need to consider the industrial and organizational environment. Stakeholders are groups of people who have an interest in the projects, policies, or outcomes of an organization's decisions. Ensure you are aware of their expectations

unions, employees, supervisors, senior managment, and board of directors.

A Proactive Approach to environmental scanning

After the environmental scanning, companies can analyze the business environment to determine the impact on the organization and the actions that the organization needs to take. Organizations can use a SWOT analysis to determine the impact on the organization.

Determining the net requirement for human capital by assessing the demand for and supply of human resources now and in the future.

Importance - reduces HR costs when you urgently need people as you already projected you needed before, so managed ahead of time. also ensures greater probability of good candidates. Increases organizational flexibility as surplus staff

Gap: shortage of human capital such that the organization is unable to meet its current or forecasted human capital requirements

Surplus: rganization has more human capital than it requires in order to meet its current or forecasted human capital requirements. What to do with surplus without layoffs? job sharing (2 part time staff) or attrition (have surplus until natrual decline occurs).

Organizations projected requirement for human capital, determine the source of human capital and availability of supply of workers.

source of human capital to meet demand requirements, obtained internally (with current members of workforce) or from external agency.

Knowledge, skills, and abilities that are held by employees and that are useful to the firm. Generic human capital because most of the time these capabilities are generally wanted in all companies.

Firm specific Human Capital:

skills that employees have based on their tacit knowledge and learned from experience in the firm and through mentorship. Very important.

Human Capital Stock and Flows:

it takes time for generic human capital to develop into firm-specific human capital, forecasting must take into account not just the stock of human capital, but also its flow.

Forecasting human capital requires that planners consider not just how many employees may be required at a given time (i.e., the stock of human capital), but also whether the requisite level of firm-specific human capital will be available for the firm to compete (i.e., the flow of human capital).

amount of human capital within the firm at any given time

represents how human capital stock changes over time.

Ask the question: how human capital can be used to solve a business problem. To aid in this planning, it can be useful to group required human capital requirements into categories: Specialist/Technitian, employment equity and designated groups memberships, manager or exectutive, or recruits.

forcasting includes both internal and external factors. The forecasting process in general can be described as following a basic pattern that flows from a macro perspective to a micro perspective. The macro perspective takes into account general trends in society and the economy. Whereas the micro level focuses more directly on challenges that are specific to the organization.

1) determine staff needs - Macro level - begins by understanding the strategy and environmental scanning in order to determine the relevant pieces of information and types of analysis that are most suited to what is being forecast

2) determine amount of staff needed. consider skills needed.

3) Create budget for costs.

4) Put HR programs and policies into place to ensure that the demand and supply requirements are met, and track the results.

easy summary of demand and supply

Demand forecasting: The process of determining the organization's requirement for specific forms of human capital.

Supply forecasting: The process of determining the source or sources of human capital to satisfy the organization's demand

Popular methods of forecasting:

1) Survey (for example, ask manager that they hire on average 4 staff in summer)

2) Norm based rule: assumptions based on historical data are used to create ratios of production or sales amounts to human capital needs.

3) time series/regression models: sales levels, marketing efforts, and seasonality or historical demand, and are able to incorporate more information than normbased rules in determining the forecast.

4) Math models: High Data Driven, large number of assumptions and variables

5) Qualitative models: based on human judgment, and includes methods such as the Delphi Technique, focus groups, Nominal Group Technique, and scenario planning. That human judgment may be best suited when a high degree of uncertainty exists or if the data or expertise is not available to construct a quantitative model

HR Time Horizons : current forcast, short run forcast, medium run forcast, and long run forcast.

Current forecast: The current forecast is the one being used to meet the immediate operational needs of the organization. The associated time frame is up to the end of the current operating cycle, or a maximum of one year into the future.

Short-run forecast: The short-run forecast extends forward from the current forecast and states the HR requirements for the next one- to two-year period

Medium-run forecast: Most organizations define the medium-run forecast as the one that identifies requirements for two to five years into the future.

Long-run forecast: Due to uncertainty and the significant number and types of changes that can affect the organization's operations, the long-run forecast is by necessity extremely flexible and is a statement of probable requirements given a set of current assumptions 5 years of more.

outcome of forecasts derived from these four time horizons leads to predictions and projections

Predictions/projections?

Prediction is a single numerical estimate of HR requirements associated with a specific time horizon and set of assumptions

Projection incorporates several HR estimates based on a variety of assumptions

The variance of the predictions around the average prediction forms an envelope within which the current set of assumptions are likely to be valid. In other words, an envelope describes the range of plausible forecast values for an existing set of assumptions

can be used if Hr planning does not work as planned and unanticipated change happens.

Plan is devised and used going forward following these changes.

Forecasting Demand: Volume and complexity of available data

it may be possible to improve the accuracy of forecasting by including more factors that contribute to changes in demand. For example, demand can be seasonal therefore labour be up and down as needed.

Quantitative vs Qualitative ways to examine Forcasting

In general, quantitative models are better when forecasting demand in stable markets when there is a high degree of certainty in the relationship between the demand for labour and the indicators of that demand.

As the volume and complexity of data that are available increase, quantitative models can deal with higher levels of uncertainty, but when uncertainty becomes very high, as in the case for something like the market for electric vehicles over the next three years, qualitative models become preferable

Trend analysis/ratio analysis/ time series model / regression analysis/ structural equation modeling

attempts to forecast future human capital needs by extrapolating from historical changes in one or more organizational incidences. Uses previous info to project future needs. Assumes future is similar to the past in regards to staffing needs and skills needs.

examining the relationship between an operational index and the demand for labour (as reflected by the number of employees in the workforce). Very commonly used

Identify what you want to track (example sales), track index overtime (4-5 years),Track Workforce size over time: Record the historical figures of the total number of employees,

Calculate the average ratio of operational index to the workforce size: Obtain the employee requirement ratio by dividing the level of sales for each year of historical data by the number of employees required to produce that year's level of sales.

use past data to predict future demand, a simple time series model might use the value from the last season as the estimate.

greater weight is given to more recent demand data.

Although trend/ratio analysis is widespread due to its ease of use, remember that the analysis usually incorporates only the relationship between a single business variable and demand for labour (workforce size).

For more comprehensive analyses that reflect a variety of factors affecting business operations, such as customer preferences, the quantitative techniques normally employed are multivariate regression or other similar modelling/programming models - these models need a high level of reliable data.

extension of trend analysis, excepts use more data than just a ratio. Purpose is to estimate a trend or relationship between one or more predictor variables and an outcome variable.

If we are able to predict enough variability in the outcome (or criterion) variable with our trend line, then the trend line may be used to extrapolate beyond the data at hand to create a forecast. If we have a single predictor variable, and plot the predictor variable (e.g., sales) along the x-axis, and plot the criterion variable (which in our case would be the number of employees required) on the y-axis, looks like the scatterplot. The slope of that line represents the amount of variability in the criterion that can be described by the independent variable.

When developing a regression model, Meehan and Ahmed suggest grouping possible predictor variables in three categories:

1) key variables, which are almost certain to play a role in predicting the employee requirement; (2) promising variables, which appear important (3) possible variables, which may not be necessary for the model

Once the variables have been selected, past data for the variables can be entered into a regression model and run through a statistics package (EXCEL).

Results of the statistics software will indicate how much variability in the criterion is predicted by the entire model; this is called the coefficient of determination. Again, the more variability in the criterion variable that is predicted by the model, the better

Positives and limitations of Regression:

very good at predicting linear relationships between variables but becomes an unreliable and potentially misleading tool for prediction when relationships are nonlinear. Linear regression produces a prediction (or trend) line that is a straight line. Thus, when the relationship between a predictor and the criterion is not linear, it is not a good choice as a predictor.

regression models require sufficient amounts of historical data on which to develop predictions. For newer or smaller firms, it may take some time to develop enough data to enable regression to be useful.

Summary of Regression models help HR planners to make use of large amounts of organizational data. These models can be easily adapted to reflect organizational changes or new assumptions, and are a good choice for short-term, medium-term, and long-term forecasts. However, quantitative models based on historical data may not be the best indicator of future needs if the business or environment is in a period of significant transition

Structural Equation Modelling

process similar to regression, except where regression deals with a single outcome variable at a time, there can be many outcome variables in a single SEM model. Primary drawback to SEM versus regression is that SEM typically requires more data observations than regression.

Qualitative Forecasting Techniques

great in mature industries or where environmental changes are predictable or stable. When there is a great degree of uncertainty, qualitative models may be preferable, or when there is no formal planning, no data collection occurs around a planning process.

Types of qualitative methods

Management Survey/ Scenario Planning/ Delphi Technique/Normal Group Technique/ HR Budget / Staffing Tables:

informal, no plan, when they need staff they hire. Manager or business consultants possess important insights into how future demand for labour should or might change in the manager's own areas of responsibility. HR is able to draw up a detailed set of assumptions with respect to industry, local, and international labour market trends that affect how the organization organizes and employs its own workforce

method often used to develop organizational strategy. Strategy-setting tool is that it encourages participants to develop strongly shared mental models of future organizational states.

Benefit of scenario planning is that while there is really no limit to the number of possible scenarios that the future could hold, this method allows planners to understand the most important assumptions that go into each demand forecast.

Consider the scenario (how many people will own electric cars in 10 years), Generate a list of factors that are likely to influence the outcome, Sort the factors into naturally occurring groups and rank the groups according to their importance to the main question, Select the two groups of factors that are likely to have the strongest and most unpredictable impact on the question. Name and describe in story form each of the four worlds in the four resulting quadrants. List KSAOs needed by staff, make forecast demand.

for long-run HR demand. "a carefully designed program of sequential, individual interrogations (usually conducted through questionnaires) interspersed with feedback on the opinions expressed by the other participants in previous rounds." Key = once the group of experts is selected, they never meet Face to Face, instead they have a coordinator asks them individual for input via questionnaire. The advantage of the Delphi technique is that it avoids many of the problems associated with face-to-face groups (shyness, status, communication issues, lack of groupthink). Also good as brings experts of different demographics together. Bad: surveys take time and money, if the experts are drawn from one specific field, their common professional training might guide them along a single line of inquiry rather than pursuing more innovative and creative courses of action

six steps associated with using the Delphi technique

1) Define or Refine the Issue or question: Ensure to keep all info well defined, focused, detailed, have few assumptions. 2) Identify the experts, terms, and time horizon: Amount or people 7-15. Inform on time, context, and expectations. 3) Orient the Experts: overview of the demand forecasting decision process 4) Issue the First Round Questionnaire. 5) Issue the First Round Questionnaire summary and the second round of questionnaires: 6) Continue Issuing questionnaires

ong-run, qualitative demand forecasting method, it differs as meet face to face and interact, but only after individual written, preparatory work has been done and all the demand estimates and each demand estimate is considered to be the property of the entire group and to be impersonal in nature, which minimizes the potential for dominance, personal attacks. also expert forecast is determined by a secret vote

HR Budget / Staffing Tables:

HR Budget: Quantitative, operational, or short-run demand estimates that contain the number and types of jobs required by the organization as a whole and for each subunit, division, or department.

Combining Quantitative and Qualitative methods:

simply use one method of each to compare results. . By using both methods of analysis, planners can arrive at a richer, more detailed understanding of the demand for labour, and how the factors that affect demand can change those estimates.

blend of qualitative and quantitative modelling that incorporates a set of assumptions about relationships among variables in a mathematical algorithm. Simulation can simultaneously model demand for supply and is very useful for testing the impact of assumptions on the outcome of the model.

Benefit of simulation in forecasting demand (and supply) is not in arriving at a more accurate forecast, but in developing a better understanding of what factors influence demand and supply. Advantage of simulation is in providing knowledge around how demand estimates might react to changes in environmental factors, in customer characteristics, in the training or skills requirements of employees, or in any of the assumptions used to build the simulation model.

When an organization attempts to forecast the supply and demand for human resources this is called?

What is forecasting why a need to forecast the supply of human resources discuss?

What is forecasting demand for human resources?

What is demand and supply method in HR planning?